1. Positively Radical

    February 2021
  2. The value of your investment and any income from it is not guaranteed and may go down as well as up and as a result your capital may be at risk.

  3. Having launched in 1954, you might assume that the Keystone Investment Trust would by now be set in its ways. Not so. A shift to a global equity mandate and the addition of a positive change objective will, we believe, make a world of difference in the years to come.

    In February 2021, Baillie Gifford became investment managers for what was the Keystone Investment Trust plc, following the decision by the board to appoint us. We proposed a radical change: not only to expand its UK equity mandate to a global equity mandate, but to apply a dual investment objective. Renamed the Keystone Positive Change Investment Trust, the trust now has two equally important objectives: to generate attractive investment returns over the long run AND to contribute towards a more sustainable and inclusive world.

    While new to Keystone, it’s a well-tested approach for its managers, Kate Fox and Lee Qian. They have been running the Baillie Gifford Positive Change Fund along the same lines for the past four years. However, the investment trust will have the added advantage of being able to borrow money to invest (gearing) and can also invest in smaller cap and private companies. These capabilities fit in well with the trust’s investment philosophy that capital thoughtfully and responsibly deployed can be a powerful mechanism for change, and they anticipate there being many exciting opportunities to do so.


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    Everyone wants to make a difference, and we strongly believe that inclusive capitalism is part of the solution to addressing the numerous environmental and social challenges that our world is facing. Rather than simply excluding companies that cause harm from the portfolio, we are proactively seeking exceptional companies whose core business activities address global challenges and have the potential to significantly improve lives. We believe it is these companies that will experience rising demand for their products and services: they will be growth businesses.

    Of these, only a carefully selected few – somewhere between 30 and 60 companies – will make the grade. Companies must demonstrate the potential to double over the next five years, with significant growth opportunities thereafter, to even be considered.

    With so many ways in which businesses could support the transition to a more sustainable world, we have created four impact themes to help us map out where we are making a difference. Latin America’s largest ecommerce platform, MercadoLibre, is also a leader in the region’s financial technology industry and sits in our social inclusion and education theme. By making it easier and cheaper for businesses to trade, its services help to reduce some of the barriers to socio-economic development in Latin America. Coming under the environment and resource needs theme, Deere uses innovative precision agriculture technology to help farmers lessen their environmental impact, while still increasing the amount of food they produce for the world’s population. Within the healthcare and quality of life theme, Dexcom’s innovative continuous glucose monitoring systems enable over 650,000 diabetics to manage their condition more effectively. The base of the pyramid theme refers to people on the bottom growth rung of the global wealth ladder. The Kenyan telecommunications company, Safaricom is one example. With over 22 million monthly users, its M-Pesa mobile money system is driving financial inclusion in Kenya.


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    At Baillie Gifford, we recognise our ability to deliver superior returns and find growth companies that can truly deliver positive change depends upon the quality of our research. That’s why we do our own, extensively. Our Positive Change Team has both investment managers and impact analysts, meaning ours is an integrated approach to considering the investment and impact potential of every company. We have over 100 investors at Baillie Gifford and a well-resourced Governance and Sustainability Team.

    As an independent investment partnership, we can afford to be resolutely long term in our investment horizon: five to ten years. This is particularly relevant for Positive Change, where the scale and complexity of the societal and environmental challenges being addressed demands we be patient and engaged investors.

    Our portfolio is truly active: our aim is to hold a small number of exceptional businesses in meaningful sizes that reflect our convictions. Positive Change is unlike its benchmark and, as a result, you can expect this to drive significantly different performance.

    We are focused on growth. We concentrate on finding exceptional, high-quality businesses. These will be run by committed management teams whose visions extend to years, not quarters, and where we believe there will be a strong competitive advantage over the long term. Where purpose complements profit.

  4. Conclusion

    Keystone Positive Change Investment Trust has embraced a radical change of direction. Perhaps the world also requires a radical change of direction to secure a safe and healthy future for us all? We believe that companies can play a significant role in providing innovative solutions to support our evolving world. Baillie Gifford’s depth of research, our long-term horizon and our focus on identifying companies with substantial growth potential means that investors can have a positive impact with their capital as well as generating attractive returns.


    Contributing Towards a More Sustainable and Inclusive World

    Our two objectives are equally important. Our annual Impact Report details the progress that companies within the portfolio have made towards meeting global challenges. The first annual Impact Report for Keystone Positive Change Investment Trust PLC will be available in 2022, covering calendar year 2021. In the meantime, an example of our Positive Change impact reporting can be found here.


    Delivering Attractive Investment Returns

    The below past performance is for the Baillie Gifford Positive Change Fund OEIC which is managed by the same investment team as the new Keystone Positive Change Investment Trust.


    Annual Discrete Performance (%) to 31 December each year

      2018 2019 2020

    Since inception p.a.

    Positive Change Fund Class B Acc















    Sector Average***






    Performance source: StatPro, FE, MSCI, total return in sterling.

    Returns reflect the annual charges but exclude any initial charge paid. The Positive Change Fund was launched in January 2017 therefore no performance is available prior to this date.

    *MSCI AC World Index ** MSCI AC World Index +2% ***IA Global Sector

    Past performance is not a guide to future returns.


    The manager believes this is an appropriate target given the investment policy of the fund and the approach taken by the manager when investing. In addition, the manager believes an appropriate performance comparison for this fund is the Investment Association Global Sector.


    The trust invests in overseas securities. Changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up. The trust can borrow money to make further investments (sometimes known as ‘gearing’ or ‘leverage’). The risk is that when this money is repaid by the trust, the value of the investments may not be enough to cover the borrowing and interest costs, and the trust will make a loss. If the trust's investments fall in value, any invested borrowings will increase the amount of this loss. Investment in smaller companies is generally considered higher risk as changes in their share prices may be greater and the shares may be harder to sell. Smaller companies may do less well in periods of unfavourable economic conditions. The trust's risk could be increased by its investment in private companies. These assets may be more difficult to sell, so changes in their prices may be greater. The trust's risk is increased as it holds fewer investments than a typical investment trust and the effect of this, together with its long-term approach to investment, could result in large movements in the share price.

    The views expressed in this article should not be considered as advice or a recommendation to buy, sell or hold a particular investment. The article contains information and opinion on investments that does not constitute independent investment research, and is therefore not subject to the protections afforded to independent research.

    Some of the views expressed are not necessarily those of Baillie Gifford. Investment markets and conditions can change rapidly, therefore the views expressed should not be taken as statements of fact nor should reliance be placed on them when making investment decisions.

    Baillie Gifford & Co Limited is wholly owned by Baillie Gifford & Co. Both companies are authorised and regulated by the Financial Conduct Authority and are based at: Calton Square, 1 Greenside Row, Edinburgh EH1 3AN. The investment trusts managed by Baillie Gifford & Co Limited are listed on the London Stock Exchange and are not authorised or regulated by the Financial Conduct Authority.

    A Key Information Document is available by visiting www.bailliegifford.com


    MSCI Legal Disclaimer

    Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.


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